Nine Madryn Street, in Dingle, was set to be knocked down by Liverpool City Council as part of regeneration plans for the Welsh Streets area of the city.

Mr Shapps said "a tide of community support" had saved the home, which he described as a "beacon of Beatlemania".

The house is one of 16 on the street to be spared, although 400 other homes in the area will be pulled down.

About 32 properties in the Welsh Streets area, including 9 Madryn Street, will now be refurbished and put on the market.

The housing minister also confirmed £14m would be available to help to bring empty homes in the Anfield area back into use.

Mr Shapps said: "Ringo Starr's home is a significant beacon of Beatlemania.

"But it's also a lot more than that - a real example of communities having the power and voice to step in and save the places they treasure most.

"Its future will now be in the hands of local residents - if they can make a success of this street then many more similar houses and streets could be saved.

By Leanne HarperBBC Merseyside Political Reporter

Housing Minister Grant Shapps arrived in Liverpool bearing gifts. Millions of pounds of investment to bring some of the city's decaying houses back into use, including the childhood home of a former Beatle.

But the case of Madryn Street is an issue which has divided the community for years - trying to balance an overwhelming need for decent homes with protecting arguably one of the less significant pieces of Fab Four heritage.

For some residents, today's announcement is the news they'd hoped for and a green light for the regeneration which they feel is long overdue.

But for others, the fact that Ringo's former home will escape the bulldozers is simply a headline-grabbing distraction from the fact that dozens more won't, and part of the city's Victorian past will be lost.

Those arguments seem likely to continue for a while yet. But with funding now secured, the potential is there for the community to show how the old and new can sit together.

"The £14m will help to transform run-down houses into homes to be proud of. Rather than destroy swathes of housing indiscriminately, we have listened to the local community."

Starr's childhood home remains boarded up and covered in graffiti left by Beatles fans from across the world.

The decision marks the end of a long row between local residents who wanted to save the streets and those who wanted the streets demolished to make way for new homes.

Nina Edge, of the Welsh Streets Resident Group, said they argued that a significant number of houses should remain as a Victorian quarter while the rest of the land is redeveloped.

She said: "What we have today is the council doing the bare minimum to save face because Ringo's house has caught the public's imagination.

"I wonder if these 16 houses will sit comfortably in their new surroundings and I fear it will look ridiculous."

Sources differ on how long Starr lived at the address before his family moved to nearby Admiral Grove, where he was living as a teenager shortly before the Beatles shot to fame.